Q22012 Columbus Industrial Market Trends

PROPERTY TYPE VACANCY RATES OVER COMPLETIONS

1 5 10 15 20 25 308.0

9.0

10.0

11.0

12.0

13.0

14.0

15.0

16.0

17.0

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

Q211

Q311

Q411

Q112

Q212

(2,000,000)

(1,500,000)

(1,000,000)

(500,000)

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Completions Absorptions Total Market Vacancy Rate

INDUSTRIAL TRENDS REPORTGREATER COLUMBUS REGION

www.colliers.com/columbus

Leasing and Construction ContinueINDUSTRIAL MARKET OVERVIEWThe Columbus industrial market recorded its fifth consecutive quarter of strong positive absorption. More than 1.4 million square feet were absorbed this quarter. More than 750,000 square feet of construction projects were completed, while another 425,000 square feet of construction began. Major leases were signed by Jacobson Warehouse at 2450 Spiegel Drive for more than 455,000 square feet and Closed Loop Refining & Recovery leasing at 1675 Wakins Road for 289,000 square feet.

FORECASTS AND REFLECTION• Blackstone purchased a 65 property portfolio

from DEXUS Property Group which included six properties in the Columbus MSA. The former 1,628,640-square-foot Whirlpool Warehouse at 6241 Shook Road in Lockbourne, Ohio sold for $57.7 million. The 116,000-square-foot 4343 Equity Drive, 144,850-square-foot 1901-1919 Dividend Drive, 227,480-square-foot 1614-1634 Westbelt Drive, and the

227,480-square-foot 4401-4419 Equity Drive were sold together in the same portfolio sale for $19.6 million. The 156,641-square-foot 2626 Port Road was sold for $2.3 million in this sale as well.

• Target began construction to expand its food distribution center in West Jefferson by 425,000 square feet. When completed, the facility will employ an additional 100 to 150

RENTAL RATES

Asking rental rates have generally been stable. Build-to-suit construction has added more than 2.2 million square feet of space to the market since third quarter 2011. There are only 30 spaces of 20,000 square feet or greater in R&D/Flex, mostly occurring in the Southwest, Southeast, Union, and West submarkets. This will start to affect price soon if leasing remains strong. The change in general asking rates over the past year has been negligible.

MARKET INDICATORS

WEIGHTED AVERAGE RENTAL RATESRates for the Major Product Types

Q2

2012*

Q3

2012**

VACANCY

NET ABSORPTION

CONSTRUCTION —

RENTAL RATES — — *Actual change from previous quarter

**Projected change from previous quarter

2.5

2.0

1.5

1.0

0.5

0

$2.20

$2.15

$2.10

$2.05

$2.00

$1.95

$1.90

$1.85

$1.803Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q10 4Q10

Q2 2012 | INDUSTRIAL

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

Q308

Q408

Q109

Q209

Q309

Q409

Q110

Q210

Q310

Q410

Q111

Q211

Q311

Q411

Q112

Q212

General Industrial R&D/Flex Warehouse/Dist.

REGIONAL INDUSTRIAL ECONOMICSThe Federal Reserve Bank of Cleveland reports at least once a quarter in the Federal Reserve’s Beige Book about the economic activity of the fourth district, which includes the Columbus Metropolitan Statistical Area (MSA). In June, the Beige Book reported that economic activity had grown at a moderate pace. Manufacturers reported that production was stable. Capacity utilization was flat as was new orders.

Freight transport volume had moved higher. The industries driving transport demand are energy and metals. Volume is expected to continue growing at a moderate pace for the remainder of the year.

The Beige Book from July 2012 reported that economic activity continued to expand since the April 2012 report. Manufacturers reported a slight rise in production. Nonresidential builders saw stronger inquiries, especially from education, healthcare, manufacturing, and multi-family

housing. Financing has become more readily available, except for speculative projects.

Freight volume was flat or moved slightly slower during May. Sectors driving demand included energy and transportation as well as seasonal products. The outlook for the remainder of 2012 remains positive, but most do not expect growth will be as strong as predicted earlier in the year.

EMPLOYMENTThe Bureau of Labor Statistics reported manufacturing employment of 61,500 employees in May which was an decrease of 1,400 employees since January 2012. Year over year manufacturing is down by 4.4 percent. Trade, transportation and utilities employment grew by 4,200 employees in May since January 2012, with 2.7 percent year over year employment. Mining, logging and construction decreased by 1,100 employees in May from January 2012 but is down 2.4 percent year over year.

The Columbus industrial market consists of 10 suburban submarkets and the Central Business District. The total inventory for the region is 213 million square feet of space.

MARKET ACTIVITY

SALES ACTIVITY

PROPERTY ADDRESS SALES DATE SALE PRICE SIZE SF GRANTOR GRANTEE PRICE / SF TYPE SUBMARKET

6241 Shook Road 06/27/2012 $57,700,000.00 1,628,640 D/P Rickenbacker LLC BRE/DP Columbus LLC $35.43 Warehouse Southeast

4343 Equity Drive 6/27/2012 $19,600.000.00

for Porfolio

116,000 RPH Industrial LLC BRE/DP OH LLC - Flex/R&D West

1901-1919 Dividend Drive 6/27/2012 Portfolio 144,850 RPH Industrial LLC BRE/DP OH LLC - Freezer/Cooler West

4401-4419 Equity Drive 6/27/2012 Portfolio 227,480 RPH Industrial LLC BRE/DP OH LLC - Warehouse West

1614-1634 Westbelt Drive 6/27/2012 Portfolio 227,480 RPH Industrial LLC BRE/DP OH LLC - Warehouse West

2626 Port Road 6/27/2012 $2,300.000.00 156,641 RPH Industrial LLC BRE/DP OH LLC - Warehouse Southeast

2001 Courtright Road 4/2/2012 $800,000.00 225,873 Tomasco Mulciber Inc. All A Cart Manufacturing - General Southeast

521 Marion Road 6/14/2012 $650,000.00 202,402 Marion Road Partners LLC 521 Marion Road LLC $3.21 Warehouse Southeast

777 James Road 5/31/2012 $3,100,000.00 137,885 Pennsylvania Railroad Co. HGI Ohio LLC $22.48 Bulk Warehouse East

8303 Green Meadows Drive 5/3/2012 $2,066,460.00 78,400 Charles Manofsky, Receiver Xigent8303 $26.36 Light Industrial North

8333 Green Meadows Drive 4/30/2012 $1,549,846.00 78,400 Green Meadow SWS LLC Developers Seven LLC $19.77 Light Industrial North

1625 Mound Street 6/7/2012 $1,400,000.00 70,910 Mid Ohio Food Bank 590 Van Buren LLC $19.74 Freezer/Cooler Southwest

1515 Universal Road 4/2/2012 $1,600,000.00 68,334 Metal Improvement Co Inc Bodycote Thermal Inc $23.41 Light Industrial Southeast

6951 Alan Schwartzwalder 5/17/2012 $1,695,000.00 60,000 MJR Enterprises INC All State Investments LC $28.25 Warehouse Southeast

Union County

Delaware County

Licking County

North

East

CBD

West

Southwest Southeast

Fairfield County

Pickaway County

Madison County

LEASE ACTIVITY

PROPERTY ADDRESS LEASE DATE LEASE SF LESSEE ASKING PRICE (NNN) TYPE SUBMARKET

2450 Spiegel Drive 5/31/2012 455,667 Jacobson Warehouse - Warehouse - Distribution Southeast

1675 Watkins Road 5/10/2012 289,624 Closed Loop Refining &

Recovery Inc

$1.95 Warehouse - Distribution Southeast

3500 Centerpoint Drive 6/25/2012 248,145 Confidential $3.25 Bulk Warehouse Southwest

5830 Green Pointe Drive 4/19/2012 194,989 Buckeye Diamond Logistics $1.00 Warehouse - Distribution Southeast

2425 Spiegel Drive 5/1/2012 135,000 NIFCO American Corporation $2.25 Warehouse - Distribution Southeast

6295 Commerce Center Drive 6/14/2012 87,000 PDSI $3.25 Warehouse - Distribution Southeast

6766 Pontius Road 6/25/2012 74,000 Confidential $3.15 Warehouse - Distribution Southeast

P. 2 | COLLIERS INTERNATIONAL

RESEARCH & FORECAST REPORT|Q22012|INDUSTRIAL|GREATERCOLUMBUSREGION

CONSTRUCTION

McGraw-HillConstruction’smostrecentreportshowedresidentialandnonresidentialfutureconstructionintheeight-countyregioncombinedincreasedby16percentto$143.6million,March2012.Thisupfrom123.7millioninMarch2011.Regionalnonresidentialdevelopmentfellby15percentto$64.4millionfrom$75.4millionayearago.

UPDATE Market Comparisons

INDUSTRIAL MARKET

Net Absorption Construction Asking Rental Rates

SUBMARKET Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions WH/Dist R&D/FlexCBD 5,507,707 756,472 13.7 (56,643) (94,911) - - - $6.63

EAST 20,682,243 3,986,693 19.3 177,830 277,795 - - $2.90 $5.83

FAIRFIELD 6,441,842 126,755 2.0 134,000 174,920 - - $4.00 $6.90

LICKING 19,607,493 893,989 4.6 - 109,000 - 774,563 $2.97 -

MADISON 8,148,397 - 0.0 - - 425,000 - - -

NORTH 16,569,909 1,236,806 7.5 98,305 154,387 - - $2.73 $4.68

NORTH DELAWARE 9,146,849 988,399 10.8 55,358 39,608 - - $3.10 $7.10

PICKAWAY 3,550,850 84,250 2.4 (10,400) (22,750) - - $2.95 -

SOUTHEAST 64,127,997 7,882,685 12.3 1,136,227 2,022,366 - 125,000 $2.61 $3.47

SOUTHWEST 17,669,037 1,100,255 6.2 63,200 192,033 - - $3.05 $3.38

UNION 6,333,817 359,905 5.7 4,000 2,860 - - - $4.56

WEST 35,406,438 3,943,676 11.1 (171,011) (151,309) - - $2.27 $4.40

TOTALS 213,192,579 21,359,885 10.0 1,430,866 2,703,999 425,000 899,563 $2.65 $4.73


SUBMARKET Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions By Product TypeR&D/FLEX 20,280,125 2,856,990 14.1% (31,255) 297,144 - - $4.73

GENERAL INDUSTRIAL 71,403,624 5,199,575 7.3% 280,312 355,674 - 659,563 $2.81

WAREHOUSE/

DISTRIBUTION

121,508,830 13,303,320 10.9% 1,181,809 2,051,181 425,000 240,000 $2.65

TOTALS 213,192,579 21,359,885 10.0% 1,430,866 2,703,999 425,000 774,563 $2.95

QUARTERLY COMPARISON AND TOTALS


QUARTER, YEAR Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions ($)Q1, 2012 212,418,016 22,790,751 10.7 1,273,133 1,273,133 898,000 - $3.04

Q4, 2011 212,618,117 24,067,884 11.3% 462,187 3,497,841 898,000 175,000 $3.09

Q3, 2011 212,243,016 24,461,112 11.5 961,800 3,035,654 1,073,000 1,805,000 $3.02

Q2, 2011 210,638,117 25,445,412 12.1% 2,447,123 2,073,854 1,910,000 (253,051) $2.84


COLLIERS INTERNATIONAL | P. 3

CENTRAL BUSINESS DISTRICTThe Central Business District (CBD) recorded 56,000 square feet of negative absorption in the second quarter, mostly due to a vacancy at 385 Mount Vernon Avenue. Absorption was strong throughout 2011, and there are still 9 spaces of 10,000 square feet vacant. Three spaces have more than 100,000 square feet available.

EASTThe submarkets comprising eastern Columbus are East and Licking County. The Licking submarket absorption was flat. In the East, Legacy Flooring moved out of 65,000 square feet at 3445 Millenium Court. An owner/user purchased 2001 Courtright Road, absorbing 212,000 square feet, and Merlin Packaging leased 24,000 square feet at 861 Taylor Road.

All of the construction in Licking County last quarter has been completed. Quebec Ontario-based KDC completed its 240,000-square-foot building. Mississauga, Canada-based Axium Plastics completed its 110,000-square-foot facility, employing 165. Construction has been completed on Pizzuti’s 303,000-square-foot speculative building. Sonoco completed its 120,000-square-foot facility as well.

NORTHThe submarkets comprising northern Columbus are North and North Delaware. The North submarket gained 98,000 square feet from numerous leases, including an owner/user purchasing 7060 Huntley Road and Solar Planet leasing 24,000 square feet at 640 Dearborn Park Lane. North Delaware absorption was 55,000 square feet on the back of owner/user Xcigent occupying 32,000 square feet at 8303 Green Meadows Drive.

SOUTHEASTThe Southeast submarket drove the market for the second quarter in a row with the largest positive absorption of 1.1 million square feet, bringing the vacancy rate down to 12.3 percent.

Jacobson, PDSI, Closed Loop, Buckeye Diamond Logistics, NIFCO all combined for more than 1,000,000 square feet of positive absorption.

Construction has been completed on Pizzuti’s 125,000-square-foot facility for MBM in Groveport at 2240 Creekside Parkway.

SOUTHThe southern submarkets are Pickaway and Fairfield counties. Fairfield absorbed 134,000 square feet and Pickaway lost a marginal 10,400 square feet.

SOUTHWESTThe Southwest submarket showed absorption of 63,000 square feet, bringing the vacancy rate down to 6.2 percent. Large leases occurred at 3420 Urbancrest Industrial Drive and 1641 Harmon Avenue.

WESTThe submarkets on the west side of Franklin county are West, Madison and Union. Union county gained a marginal 4,000 square feet.

The West submarket showed 171,000 square feet of negative absorption mainly coming from the vacancy of a casket manufacturer at 315 Phillipi Road

Madison showed no leasing activity but construction has begun on expanding the Target Corp. distribution center by 425,000 square feet.

MARKET INTELMarket Activity Volume is the sum of the absolute value of each absorption change in the market. It tells us a little more about what exactly happened to the market behind the absorption number. The Market Activity Volume was 2,743,340 square feet. This is average for second quarters in the past three years.

There are 51 buildings with vacant contiguous space equal to or greater than 100,000 square feet left in the Columbus market. 11 were built since 2000 and 10 of those are warehouse/distribution. These vacancies will keep warehouse/distribution asking rates low while they last.

TENANTS IN THE MARKETThe types of tenant seen most frequently are bulk warehouse users seeking more than 200,000 square feet of Class A space; third party logistics, auto parts distributors, healthcare, and tire users. There are currently at least 21 companies looking for 100,000 square feet or greater in Columbus, and at least 39 companies looking for 15,000 up to 99,999 square feet of space.

Leslie HobbsDirector of Marketing | OhioTwo Miranova PlaceSuite # 900Columbus, Ohio 43215TEL +1 614 410 5640

Jonathan SchuenResearch AnalystTwo Miranova PlaceSuite # 900Columbus, Ohio 43215TEL +1 614 437 4495

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• $1.8billioninannualrevenue

• 1.25billionsquarefeetundermanagement

• Over12,500professionals

This document/email has been prepared by Colliers International for advertising purposes. Colliers International statistics and data are audited annually and may result in revisions to previously reported quarterly and final year-end figures. Sources include Columbus Dispatch, Business First, Xceligent, CoStar, Chain Store Age, Wall Street Journal, Bureau of Labor Statistics, Bureau of Economic Analysis, Gallup and the Cleveland Federal Reserve.

www.colliers.com/columbus

Accelerating success.

UNITED STATES:

ColumbusRichard B. Schuen SIOR CCIMCEO | Principal | ColumbusTwo Miranova PlaceSuite # 900Columbus, Ohio 43215TEL +1 614 410 5612


Real Estate

Q22012 Columbus Industrial Market Trends